The firm that was awarded the District's cable television franchise late last year has yet to sign the agreement and is having trouble lining up the necessary financing, leading Mayor Marion Barry and other city officials to say they are concerned the agreement may be in jeopardy.
Robert L. Johnson, president of District Cablevision Inc., has until mid-March to ratify the agreement, which Barry signed Dec. 28, or lose the contract. Without Johnson's signature, the city might award the contract to one of two competing firms, according to city officials.
Barry said yesterday that banks and other lending institutions have been reluctant to put up $50 million in financing for the cable system until a lawsuit challenging the legality of the franchise agreement has been resolved.
"There's some concern on the part of the city ," Barry told a reporter following his monthly press conference. "I know what he Johnson says the problem is -- that he can't raise money with the threat of a suit, and that's a valid concern. Investors will not invest with a lawsuit going on. They don't want their money taken up in legal fees."
The agreement, when signed, would oblige District Cablevision to begin spending thousands of dollars on the system. The firm could lose millions of dollars if it signed the agreement and did not promptly start work.
City Council member Betty Ann Kane (D-At Large), chairman of the council's Cable Television Committee, said she was surprised that District Cablevision has taken so long to sign the agreement. She said Johnson never indicated to the council that the lawsuit, which was filed by one of his competitors, would pose a serious problem.
"The ball is in their court," she said. "They wanted it, so they should sign it. . . . We still have before us two other applications. We would have the option of deciding whether to grant the franchise to one of the two other applicants. We would not have to go back to square one."
Johnson yesterday declined to comment on the mayor's remarks or to discuss his firm's problems.
The City Council last month cleared the way for the long-awaited arrival of cable television in the District by voting to award a 15-year franchise to District Cablevision, a local firm that would have the Chesapeake & Potomac Telephone Co. construct and own the transport lines for the cable system.
District Cablevision officials said at the time that once the legislation and contract were signed by the mayor and cleared a 30-day congressional review period, construction on the $130 million system would begin in 1985 and some homes in every section of the city would be wired for cable by early 1986.
Capital City Cable, an unsuccessful bidder for the cable franchise, filed a $125.7 million antitrust lawsuit in U.S. District Court last November, alleging that District Cablevision and C&P conspired illegally to win the franchise.
At the time, Johnson said the suit was "totally without merit," but acknowledged to a reporter that it "would be a significant shadow in attracting any investments."
Three months after the agreement takes effect, District Cablevision must put up $312,500 in cash or a letter of credit as part of an overall $2 million security fund. The firm also would have to put up $250,000 as a partial reimbursement to the city for money spent in setting up the franchise and an additional $62,500 to cover the first quarter of the company's annual franchise fee to the city.
District Cablevision potentially could lose as much as $5 million, including equipment and public access contributions, to the city if it signed the contract but then failed to begin construction within the first 18 months, according to Richard Maulsby, executive director of the city's cable television office.
Maulsby said the City Council could grant Johnson and extension beyond the mid-March deadline, which is imprecise because it is tied to the congressional review period for city legislation, based on the number of days Congress is in session. He said he believed the deadline would fall on March 12.
Barry hinted yesterday that the city may intervene to try to help Johnson, but declined to comment further.